Trump administration to study tools to raise U.S. tariffs on Chinese autos

WASHINGTON (Reuters) - U.S. Trade Representative Robert Lighthizer said on Wednesday that he was examining all available tools to raise U.S. tariffs on Chinese vehicles to the 40 percent duties that China is now charging on U.S.-produced vehicles.

Newly manufactured cars are seen at the automobile terminal in the port of Dalian, Liaoning province, China October 18, 2018. REUTERS/Stringer

Lighthizer said in a statement criticizing China’s “egregious” tariffs on U.S. autos that he was taking such action at the direction of President Donald Trump.

The statement came just days before Trump is due to meet Chinese President Xi Jinping in Buenos Aires in a showdown that could ease or worsen the trade war between the world’s two largest economies.

Automotive duties on both sides have been increased by tit-for-tat tariffs. The United States imposed a 25 percent tariff on Chinese vehicles on top of the 2.5 percent it normally charges.

China had lowered tariffs for all other countries to 15 percent, but imposed an additional 25 percent retaliatory tariff on U.S. vehicles.

Chinese auto exports to the United States are relatively small. It exported 53,300 vehicles to the U.S. market last year and imported 280,208 U.S. manufactured vehicles, according to data from the China Automotive Technology and Research Center (CATARC), a government-affiliated think-tank.

Carmakers are already rearranging global production to absorb the rising trade tensions between the world’s two biggest economies.

Volvo, which is owned by Chinese carmaker Geely, plans to move most of the production of its best-selling XC60 SUV for export to the U.S. market away from its Chengdu plant in China to Torslanda in Sweden.

The Trump administration is seeking sweeping changes to China’s state-driven economic policies, including new protections for U.S. intellectual property, an end to joint-venture requirements, more access for U.S. firms to China’s vast market and cuts to China’s industrial subsidies.

“As the President has repeatedly noted, China’s aggressive, State-directed industrial policies are causing severe harm to U.S. workers and manufacturers,” Lighthizer said. “We are continuing to raise these issues with China. As of yet, China has not come to the table with proposals for meaningful reform.”

Reporting by David Lawder; Additional reporting by Yilei Sun in BEIJING; Editing by Peter Cooney and Darren Schuettler